e-discovery 2.0

Part I of this series discussed a number of approaches for reducing electronic discovery costs.  One of the approaches is to implement a document retention policy.  The popularity of document retention policies increased in the early part of the decade with the passage of new financial regulation, such as Sarbanes-Oaxley.  Data retention policy popularity has now increased again with the passage of the FRCP and the recognition of the challenge of electronic discovery costs.  How effective, though, are document retention policies in reducing electronic discovery costs?  Do they solve the electronic discovery cost problem?

It is certainly true that any policy that enforces the deletion of documents that might otherwise be discoverable should reduce electronic discovery costs.  Thus, document retention policies, just like enforced mailbox size limits, can absolutely help reduce e-discovery costs.  However, implementing a retention policy is not easy.  A recent article in the New York Law Journal by Adam Rosman is very insightful in this regard when he says, “the rub is implementation.”   Mr. Rosman outlines a conversation between a hypothetical company’s Associate General Counsel and the CTO that demonstrates that the major challenge with retention policies is not designing one.  Rather, the challenge is implementing a policy that effectively balances the needs for litigation readiness and e-discovery, regulatory compliance and knowledge management and can be cost-effectively enforced throughout a company’s IT organization and user community.  Given this, it’s not surprising that a 2006 study by Nextpage and CXO research found that “while two-thirds of the companies surveyed have a document retention policy in effect, almost half of them don’t actively enforce it” and why 39% of respondents cited implementing a standard policy and 34% percent said user compliance were major weaknesses in implementing retention policies.

Because of these implementation challenges, retention policies are not a quick way to reduce your e-discovery costs.  They are also not going to reduce enough data to solve an organization’s e-discovery cost “problem.”  First, due to the implementation challenges, retention policies are not going to delete all the electronically stored information (ESI) they should.  Second, HIPAA, Sarbanes-Oaxley (SOX) and FINRA regulations require that many documents must be retained for several years.  Finally, business users will demand many exceptions: emails, loose files, collaboration content, financial records, contracts, etc. that they want to save beyond the retention period for important business reasons.  As a result, even companies with retention policies are going to have a substantial and growing amount of discoverable ESI and the electronic discovery costs that go with that.

Document retention policies thus are a bit like taking vitamins.  They are likely going to help reduce the amount of time you are sick – although you’ll probably find some “studies” that say they do help and some that don’t.  But when you get sick, they aren’t going to make you better.  For that, you need a remedy that directly targets the specific problem.  Similarly, document retention policies, and you can say the same thing about all information management solutions to e-discovery, will help reduce e-discovery costs, but they won’t solve the e-discovery cost problem.  Specific e-discovery solutions are necessary to do that.  We’ll discuss many of these specific e-discovery solutions in the next set of posts in this series.